Staff Report #5
March 31, 2021
To All Commissioners
Re: Recosted 2021 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2021 capital budget of $20,109,000 as summarized below noting the recosted budget reflects the previously approved 2021 capital budget program, program updates and carry forward amounts relating to deferred or active 2020 capital projects.
2021 Recosted Capital Budget
| Description | Source of Investment | Total | |||
| Capital Program Reserve | City of London | Federal and Provincial (ICIP) | Provincial Gas Tax | ||
| Stop Upgrades | $ 743,700 | $ – | $ – | $ – | $ 743,700 |
| Service Fleet | 50,000 | – | – | – | 50,000 |
| Shop Equipment | 200,000 | – | – | – | 200,000 |
| Software and Hardware | 470,000 | – | – | 210,000 | 680,000 |
| Facility Upgrades | – | 500,000 | – | – | 500,000 |
| Bus Replacements | – | 8,069,200 | – | 2,550,700 | 10,619,900 |
| Bus Expansion | – | 346,800 | 953,600 | – | 1,300,400 |
| Bus Stop Amenities | – | 293,400 | 806,600 | – | 1,100,000 |
| Fleet Radio Replacement | – | 312,500 | – | 312,500 | 625,000 |
| TMP 2030 – BRT Strategy | – | – | – | 1,500,000 | 1,500,000 |
| Fare Processing Eqpmt | – | 747,500 | – | 1,747,500 | 2,495,000 |
| Smart Card Program | – | – | – | 295,000 | 295,000 |
| $1,463,700 | $10,269,400 | $ 1,760,200 | $6,615,700 | $20,109,000 | |
Background
At the August 26, 2020 Commission meeting, the 2021 capital budget program of $16,448,500 was approved. A recosting exercise for both capital and operating budgets occurs at the beginning of the year after all City of London funding is confirmed and takes into consideration pricing updates, program changes as well as any prior year projects that have not been completed or deferred to the future. The following table provides a summary by project of the proposed updated capital budget highlighting the original approved budget, program updates as well as 2020 projects to be carried forward.
Summary of 2021 Recosted Capital Budget
| Description | Original Approved Budget | Program Updates | 2020 Carry Forward | Total |
| Program: | ||||
| Stop Upgrades | $ 303,000 | $ – | $ 440,700 | $ 743,700 |
| Service Fleet | 50,000 | – | – | 50,000 |
| Shop Equipment | 200,000 | – | 200,000 | |
| Software and Hardware | 200,000 | – | 480,000 | 680,000 |
| Facility Upgrades | 500,000 | – | – | 500,000 |
| Bus Replacements | 10,081,000 | 538,900 | – | 10,619,900 |
| Bus Expansion | 4,064,500 | (2,764,100) | – | 1,300,400 |
| Bus Stop Amenities | 550,000 | – | 550,000 | 1,100,000 |
| Fleet Radio Replacement | – | 625,000 | 625,000 | |
| TMP 2030 – BRT Strategy | – | 1,500,000 | 1,500,000 | |
| Fare Processing Equipment | 500,000 | – | 1,995,000 | 2,495,000 |
| Smart Card Program | – | 295,000 | 295,000 | |
| Total | $ 16,448,500 | $(2,225,200) | $ 5,885,700 | $20,109,000 |
| Funding: | ||||
| Provincial Gas Tax | $ 2,511,800 | $ 538,900 | $ 3,565,000 | $ 6,615,700 |
| Capital Program Reserve | 753,000 | – | 710,700 | 1,463,700 |
| City of London | 9,799,900 | (737,200) | 1,206,700 | 10,269,400 |
| Federal and Provincial (ICIP) | 3,383,800 | (2,026,900) | 403,300 | 1,760,200 |
| Total | $16,448,500 | $ (2,225,200) | $ 5,885,700 | $20,109,000 |
Program Updates
The capital budget for the 2021 replacement and expansion bus programs require updates for the following:
- Unit Cost (Replacement) – the original unit cost was based on 2020 pricing and is updated to reflect the actual 2021 price negotiated with New Flyer, which includes updates to the build for Operator barriers and a general price increase.
- Unit Cost (Expansion) – the updated unit cost is also applied to the expansion bus project, but note the original budgeted unit cost for the project assumed a weighted average price of 40’ and 60’ models. The 2021 Service Plan calls for 40’ buses.
- Quantity (Expansion) – the original budget had a placeholder of five expansion buses, but with the finalization of the 2021 Service included in Staff Report #1, dated January 27, 2021, the total was revised to two buses.
- Ancillary Equipment (Replacements) – replacement buses continue to utilize ancillary equipment from the bus being replaced that is fit for re-installation on the new bus. However, more of the equipment is requiring full replacement due to it reaching the end of its useful life as well as it becoming obsolete and unserviceable. This includes MDT’s, IVLU equipment, cameras and APC analysers. The increase is budgeted to cover these new replacement items.
- Inspections – the budgeted cost for contracting bus inspections during the assembly process is being updated to reflect the actual anticipated unit rates for 2021.
The table below sets out the updates to the original budget for the 2021 Bus Replacement project.
Summary of 2021 Recosted Bus Replacement Project
| Original Approved Budget | 2021 Recosted Capital Budget | Program | |||||
| Qty | Unit Cost | Total Cost | Qty | Unit Cost | Total Cost | Change | |
| Bus cost (40′) | 17 | $ 578,800 | $9,839,600 | 17 | $ 603,800 | $10,264,600 | $ 425,000 |
| Farebox, AVL, Cameras and Radio | 17 | 9,500 | 161,500 | 17 | 15,000 | 255,000 | 93,500 |
| Inspection | 17 | 2,200 | 37,400 | 17 | 3,400 | 57,800 | 20,400 |
| Preparation cost | 17 | 2,500 | 42,500 | 17 | 2,500 | 42,500 | – |
| 17 | $ 593,000 | $10,081,000 | 17 | $ 624,700 | $10,619,900 | $ 538,900 | |
| Funding: | |||||||
| Provincial Gas Tax | $ 2,011,800 | $ 2,550,700 | $ 538,900 | ||||
| City of London | 2,866,000 | 2,866,000 | – | ||||
| Federal Gas Tax | 5,203,200 | 5,203,200 | – | ||||
| $10,081,000 | $10,619,900 | $ 538,900 | |||||
The increase of $538,900 is the result of the unit price change, additional ancillary equipment required and inspection costs price change. The increase is funded from Provincial Gas Tax as the funding levels from the City of London have been set in the 2021 budget process.
The table below sets out the updates to the original budget for the 2021 Bus Expansion project.
Summary of 2021 Recosted Bus Expansion Project
| Original Approved Budget | 2021 Recosted Capital Budget | Program | |||||
| Qty | Unit Cost | Total Cost | Qty | Unit Cost | Total Cost | Change | |
| Bus cost – 40′ Diesel | 5 | $ 768,200 | $ 3,841,000 | 2 | $ 603,800 | $ 1,207,600 | $ (2,633,400) |
| Farebox, AVL, Cameras and Radio | 5 | 40,500 | 202,500 | 2 | 40,500 | 81,000 | (121,500) |
| Inspection | 5 | 1,700 | 8,500 | 2 | 3,400 | 6,800 | (1,700) |
| Preparation cost | 5 | 2,500 | 12,500 | 2 | 2,500 | 5,000 | (7,500) |
| 5 | $ 812,900 | $ 4,064,500 | 2 | $ 650,200 | $ 1,300,400 | $ (2,764,100) | |
| Funding: | |||||||
| City of London | 16.0% | $ 650,400 | 16.0% | $ 208,100 | $ (442,300) | ||
| City of London – DC | 10.7% | 433,600 | 10.7% | 138,700 | (294,900) | ||
| Provincial – ICIP | 33.3% | 1,354,700 | 33.3% | 433,400 | (921,300) | ||
| Federal – ICIP | 40.0% | 1,625,800 | 40.0% | 520,200 | (1,105,600) | ||
| 100.0% | $ 4,064,500 | 100.0% | $ 1,300,400 | $ (2,764,100) | |||
The reduction of $2,764,100 is the result of the decreased number of expansion buses required in the approved 2021 Service Plan. The unit cost and inspection costs have also been updated as noted above.
2020 Actual Results and Projects Carried Forward to 2021
Set out in Enclosure I is the Capital Program Summary for the twelve months ending December 31, 2020. As indicated in the Enclosure, a number of the projects planned for and included in the 2020 capital budget program were not completed in 2020 or have been deferred to future years. Given funds have been approved for the projects, the outstanding amounts are carried forward to 2021 where necessary. The following table summarizes the 2020 capital expenditures for outstanding projects and the corresponding carry forward amounts, including the same funding source, for inclusion in the 2021 Capital Program.
Summary of 2020 Carry Forward Capital Projects
| Description | 2020 Actual | 2020 Budget | Variance | 2021 Carry Forward |
| Program: | ||||
| Stop upgrades | $ – | $ 440,700 | $ 440,700 | $ 440,700 |
| Software and hardware | 65,318 | 700,000 | 634,682 | 480,000 |
| Bus stop amenities | – | 550,000 | 550,000 | 550,000 |
| Fleet radio replacement | – | 625,000 | 625,000 | 625,000 |
| TMP 2030 – BRT strategy | – | 1,500,000 | 1,500,000 | 1,500,000 |
| Smart card program | 29,846 | 325,000 | 295,154 | 295,000 |
| Fare processing equipment | – | 1,995,000 | 1,995,000 | 1,995,000 |
| $ 95,164 | $ 6,135,700 | $ 6,040,536 | $ 5,885,700 | |
| Funding: | ||||
| Provincial Gas Tax | $ 29,846 | $ 3,595,000 | $ 3,565,154 | $ 3,565,000 |
| Capital Program Reserve | 65,318 | 930,700 | 865,382 | 710,700 |
| City of London | – | 1,206,700 | 1,206,700 | 1,206,700 |
| Federal and Provincial (ICIP) | – | 403,300 | 403,300 | 403,300 |
| Total | $ 95,164 | $ 6,135,700 | $ 6,040,536 | $ 5,885,700 |
The Commission will be provided with regular updates on the status of the programs included in 2021 capital budget.
Enclosure
I – 2020 Capital Program Summary
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager